Inside Wall Street: Is ImmunoCellular Another Rising Star in Biotech?

The significance of cancer stem cells (CSC) is the latest hot, though controversial, topic in scientific circles. The talk about CSC has widened to a point that it has become the subject of articles published by popular nonscientific magazines. In 2008, The Economist had a prominent story on "cancer and stem cells," which noted that "the connection could lead to a cure." Cancer may be caused by stem cells gone bad, said the magazine, and if that proves to be correct, "It should revolutionize treatment."

Indeed, in a more recent article published in The New York Times Magazine on Oct. 29, 2010, a case was made that CSC may be the "cancer sleeping cell." The article by Siddhartha Mukherjee, assistant professor in Columbia University's division of medical oncology, argued that CSC may be the cause of relapse in many cancer patients. CSC might be the "ultimate determinant of relapse" in patients, which may "redirect our efforts to develop anticancer drugs," says Mukherjee, who has also authored the book, Emperor of all Maladies: A Biography of Cancer.

Is it possible, Mukherjee asks, that "the quest to treat cancer has also stalled because we haven't found the right kind of cell?"

CSCs encode instructions to generate more tumor cells that don't necessarily bear any resemblance to their parents, or creators. As a result, CSC may be immune to the treatments designed to attack the tumors they create -- and, therefore, are ready to cause a relapse in a cancer patient even when the tumor seems to have disappeared.
Preparing for a Phase II Trial

If cancer stem cells are the real culprit of cancer recurrence, "then true victory over cancer requires treatments designed to target them specifically," says Manish Singh, president of ImmunoCellular Therapeutics (IMUC), who is very familiar with the subject: His company is the only publicly traded outfit in the field of cancer vaccines or monoclonal antibodies dedicated primarily to the development of CSC-targeted therapeutics. Others involved in CSC studies are some of the Big Pharmas, including Pfizer (PFE) and GlaxoSmithKline (GSK), which have a lot of other things on their plates.

Late this year, ImmunoCellular is starting a Phase II clinical trial for its chief product, ICT-107, a novel brain cancer vaccine that targets CSC in glioblastoma, or brain cancer, the same aggressive type of brain cancer that killed Senator Ted Kennedy. Singh says ICT-107 is custom-built to target cell-surface proteins that are highly expressed by CSC, as well as regular tumor cells. Tumors, he notes, are like weeds, and their eradication requires killing the CSCs at their roots.

In its Phase 1 clinical trial, ICT-107 increased disease-free survival by a significant amount in newly diagnosed glioblastoma patients, compared with the best standard of care, says Singh, without any serious side effects. "Phase 1 results were astonishingly positive as we have 45% of patients in the study without any measurable diseases after two years," says Singh.

A Better Bet Than Dendreon?

ICT-107 is produced by harvesting a patient's own dendritic cells, similar to what Dendreon's (DNDN) blockbuster drug Provenge does, and programming them to attack cancer. But unlike Provenge, which targets prostate cancer, ICT-107 targets brain cancer.

Another disparity separates the two companies: Dendreon boasts a market capitalization of $5.1 billion, with its stock trading at $37 a share, down from a 52-week high of $57. ImmunoCellular's market value is a mere $21.7 million, with its stock at $1.17, down from a 52-week high of $2.44.

That's why some pros believe ImmunoCelluar would be a better bet, given its vaccine that targets CSCs, and its stock priced at just over a dollar.

An Appealing Risk-Reward Ratio

This stock is ripe for momentum investors and day traders to take it up to $10 a share, which would bring it in line with other early-stage companies, notes Reni Benjamin, biotech analyst at investment Rodman & Renshaw. Since Rodman doesn't officially follow ImmunoCellular, Benjamin doesn't have a rating on the stock.

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Tony Lowbeer, a partner at Scarsdale Securities, which recently purchased $2 million worth of ImmunoCellular's stock, says he trusts management and its efforts to develop a glioblastoma vaccine. If it works, investors could make 10 times their investment, says Lowbeer. "I like the stock's risk-reward ratio, and I am excited about the product and our investment in the company," he adds. Also a large investor is SDL Ventures, which owns $1.5 million worth of stock.

If the survival data from the Phase II clinical trial of ICT-107 comes out with results as impressive as the Phase I trial's, tiny and little-known ImmunoCelluar could jump onto the stage with Dendreon as a prospective star in biotechnology.